[Author’s Name]
[Institutional Affiliation]
1. A. The term strategic management can be defined as the overall strategy of the organization. Analysis, decision and action are the three basic processes of strategic management. In analysis, strategic goals are analyzed along with the analysis of external and internal environment effecting the organization. After the analysis the management must make strategic decisions. At the last stage there are the actions that need to be taken to implement the analyzed and decided strategies.
1. B. Strategic management involves focusing the best way to respond to the circumstances of the organization's environment. As the strategic management is all about strategic fundamental decisions and actions for present to keep the future in view as well, failure to engage in strategic management can change the direction of the organization disabling it to respond to the environment and competition will get an edge over the organization.
2. A. Formulation: An overall strategy is made in this step for achieving the objectives of the organization. The top level of management is fully involved in this step and they may or may not seek the input of the line managers
Implementation: Top down approach is used for implementation as the objectives are set by high level management. The top level management will inform line managers and line managers are responsible to clearly pass the information to their subordinates. The management must have to be open in this two way process so that the subordinates may discuss any concerns about the changes to be implemented.
Evaluation: Once implemented, every strategy needs to be measured for success. The rate of success is measured by evaluating the implemented strategy against the firm’s objectives.
Modification: If the phase of evaluation states that all the desired goals are not achieved then it is desired and mandatory to change or modify the strategy implemented. There is a chance that the strategy implemented acted in opposite direction and organization have to re build the strategy for the set goals.
2. B. Implementation Phase of strategic management is most applicable to buy-in from employees at all levels of a firm. Implementation requires direct communication from the top level management to the line managers. Line managers then have to ensure that every detail is communicated to get the buy-in from employees.
3. A. Situational Analysis: The external and internal environment are scanned and evaluated in situation analysis. Internal company environment includes employee interaction with peers, with managers, managers’ interactions with peers and with higher management and shareholders. External environment is made up of competitors, suppliers, customers and creditors.
Strategy Formulation: Specifies objectives, develops strategies and the policy guidelines for the organization. Strategy formulation is done on three levels corporate, competitive and operational. Corporate strategies define the direction of the organization and are long term. Strategy Implementation: This element defines the methods, steps and procedure for the execution of the strategy. Strategy prioritization is also a part of implementation. Prioritization defines which strategy or decision is critical in nature.
Strategy Evaluation: Strategy evaluation involves the monitoring of corporate activities and results of performance for the outcome to compare it with the desired results. In case it is monitored that the results are not as desired or perceived then the implemented strategy should be reformulated accordingly.
3. B. All the four elements of the strategic management play an important and vital role. Situational Analysis figures out the factors and the present and future situation. Strategy Formulation provides the firm with plans, goals, objectives and the milestones to achieve. Strategy Implementation helps the organization to effectively implement the strategies based on their scope and requirement. The most critical elements which need to be fixed are addressed earlier than any other issue. Same importance is of evaluation. Strategy evaluation evaluates the effectiveness of the strategies implemented and without evaluation of the strategies nothing can be measures. Every single element is as important as any other and these four elements collectively define the strategic management with visible results, if done properly.
4. A. Strategy is a plan of action or a specific policy designed to achieve a goal or objective. Any plan implemented for a desired result, such as finding the solution to a specific problem.
4. B. Product strategy, Technology strategy, Differentiation strategy
5. A. There are five important forces that shape competitive power in a business situation as described by Porter:
- Supplier Power: In case of few substitutes, suppliers may refuse to work for the firm or may ask for higher charges being the owner of unique resources. In case of availability of suppliers, there can be another issue of cost of switching from one supplier to another.
- Buyer Power: The importance of each individual buyer, cost of switching form one product to another and the number of buyers drives the buyer power.
- Competitive Rivalry: If a firm is dealing with various competitors who are offering the same quality products with same features and services, then the firm will have no or little power in the situation.
- Threat of Substitution: If customers can easily find an easy and cost effective way to fulfill their need of a product which they buy from the market, then they will switch. For example – If a firm sells filtered water bottles and customers get to know that the tap water in their city is as safe as any filter water, the customers will shift easily.
- Threat of New Entry: The proficiency of the people to enter market also affects power. The competitors can take a competitive advantage if they have to spend little time or capital to enter the concerned market. They can also prove to be more efficient if the economies of scale are minute or the major technologies are not protected adequately.
5.B. With a clear perceptive, any small firm can take the advantage of the strength, can improve easily from any weakness and can easily avoid implementing wrong strategies.
6.A. If a company can gain advantage in a scenario where it can provide the same value compared with the competitor but at a lower price. Competitive advantage can also be gained by charging higher prices and providing greater value by using differentiation strategy.
6. B. Cost Leadership Strategy - Differentiation Strategy - Innovation Strategy
7. A. Growth: Vertical growth and horizontal growth. Vertical growth focuses on the existing customers to increase the spending from the consumer. Horizontal growth focuses on getting new customers and makes them buy products to increase the circle of customers.
Stability: Stability strategy involves the current activities of the organization to continue. In case the external environment is not stable but the results are better than the firm might not change. In a stability strategy the management of the firm are not willing to take risks that they can face by expanding or growing the business.
Retrenchment: In this strategy a firm may start layoffs, may eliminate a product line or service or even can announce liquidation or bankruptcy.
7. B. Directional strategies are the basis for the security of the company in terms of growth and evaluation of the product line. A firm can easily get off tracked without using directional strategies. Their goals will not be achieved when the firm will not go in a specific direction or towards a specific milestone. The best way to keep a firm focused towards its objective is to choose a better directional strategy.
8. A.B. Stage One—Domestic: The company only focuses on the local markets, local suppliers, and local competitors. If this firm can perform well domestically, they may think to expand and move to stage 2.
Stage Two—International: expansion in manufacturing, marketing and other operations outside the base country is the 2nd stage.
Stage Three—Multinational: A company when starts to respond to market differences and start formulating a different strategy for every different country where they operate, then they are at stage three.
Stage Four—Global: at this stage the company will have a global marketing strategy. The focus will be on the global market in case they source from home country or the focus will be on domestic market and source from the world.
Stage Five—Transnational: at this stage the company will think globally but will act locally. These are the companies that think globally and acts locally. A global strategy is adopted by such companies which allow the companies to minimize adaptation.
